Länsförsäkringar and ABN AMRO enter into cooperation and services agreement in asset management
3/11/2002 3:00 AM EST
Länsförsäkringar and ABN AMRO enter into cooperation and services
agreement in asset management
The goal of the cooperation and services arrangement is to further
improve the potential for high and stable investment returns for
Länsförsäkringar's (the "LF Insurance Group") policyholders.
· According to the asset management agreement ABN AMRO will take
over the day-to-day management of most of the LF Insurance Group's
investment assets on behalf of approximately 600,000 life policyholders
and 200,000 mutual fund customers.
· The assets under management of the agreement represents
approximately SEK 115 billion. The majority of these assets are sourced
from the LF Insurance Group's life insurance company and mutual fund
company.
· The LF Insurance Group retains ownership responsibility for all
investments, including decisions on investment orientation and the
voting rights of all shares.
· Asset management fees will be lower than today. The fees will
contain a higher element of performance-related incentives.
"Through this agreement with ABN AMRO, our customers will gain access to
world-class asset management expertise", says Tommy Persson, CEO of
Länsförsäkringar AB.
The Swedish savings market is undergoing rapid change and managers of
pension funds are increasing the proportion of international investments
to improve their possibilities of achieving high and stable investment
returns. Swedish mutual fund customers are also increasingly selecting
funds that invest in foreign securities and if Sweden joins the EMU, the
market for Swedish fixed income securities will diminish.
"The demand for an international research and fund management capability
for asset managers has increased dramatically. Today, it is a necessity
to have the ability and resources to evaluate all available investment
alternatives in the international financial markets. With our relatively
small size, we have limited possibilities to retain such investment
activities at acceptable cost levels," says Tommy Persson.
"Through the cooperation with ABN AMRO, we are now creating better
conditions for future high and stable investment returns for our
customers," says Hans Benndorf, CEO of the LF Insurance Group's life
insurance company.
The overall responsibility for the customers' investment return remains
with the LF Insurance Group. The LF Insurance Group's Board of Directors
will continue to define the strategic investment allocation, including
the mix between equities and fixed-income securities. ABN AMRO's asset
management assignment is to be handled within pre-defined investment
return requirements and risk levels. LF Insurance Group can terminate
the ten-year asset management agreement prematurely if the required
levels of return are not met.
Customer contact remains with the 24 LF Insurance Group regional
companies and policyholders and investment services will therefore not
be affected by the asset management cooperation with ABN AMRO.
The cooperation with ABN AMRO leads to LF Insurance Group's customers
gaining access to several international mutual funds, including both
mutual fund savings and unit-linked insurance savings. The trend is that
increasing numbers of customers select pension insurance schemes that
enable personal control of their savings allocations. During the next
few years, the LF Insurance Group's offering will also be expanded to
include mutual funds from other external players.
In total, some 30 of the world's leading asset management firms were
included in a selection process that the LF Insurance Group initiated
last autumn. The decisive selection criterion has been the partner's
ability to deliver sustainable high and stable returns at an acceptable
cost level.
Länsförsäkringar Kapitalförvaltning, the unit currently responsible for
the day-to-day asset management, will be discontinued. A number of key
personnel will be offered employment within ABN AMRO's Swedish unit,
Alfred Berg Kapitalförvaltning in Stockholm. ABN AMRO's ambition is to
gain full benefit from the high expertise within the LF Insurance Group,
particularly within Swedish equity mutual funds and fixed-income mutual
funds.
ABN AMRO is paying SEK 1.3 billion to Länsförsäkringar AB for the rights
within the cooperating and services agreement to take over the day-to-
day asset management services.
The cooperation is scheduled to launch in June 2002 assuming all
regulatory approvals have been granted.
"We are proud that the LF Insurance Group has chosen to cooperate with
ABN AMRO. ABN AMRO is truly a global asset manager, which gives us the
possibility to meet the LF Insurance Group's high demands for
international capacity, quality and product offering," says Tom Cross
Brown, CEO of ABN AMRO Asset Management.
ABN AMRO Asset Management currently has approximately SEK 1,500 billion
in assets under management.
Merrill Lynch and Lenner & Partners have been financial advisors to the
LF Insurance Group. Alfred Berg has been the financial advisor to ABN
AMRO Asset Management.
For additional information, contact:
Tommy Persson +46 8-588 417 90
CEO Länsförsäkringar AB + 46 73-964 17 90
Hans Benndorf +46 8-588 408 14
CEO of the LF Insurance Group's +46 73-964 08 14
life insurance company
Örian Söderberg +46 8-588 408 90
CEO of the LF Insurance Group's +46 73-964 08 90
mutual fund company
Christer Baldhagen +46 8-588 415 01
Information Manager, Länsförsäkringar AB +46 70-579 70 66
Arne Lindman +46 8-723 58 08
Nordic regional manager +46 70-423 48 08
ABN AMRO Asset Management
Länsförsäkringar, with 24 independent regional insurance companies and
the jointly owned Länsförsäkringar AB, is Sweden's only customer-owned
locally established banking and insurance group. Länsförsäkringar offers
a broad range of policies and financial services for companies and
private individuals. Länsförsäkringar is a leader in the Swedish market
for non-life insurance. Its share of the market amounts to slightly more
than 28 percent. Its share of the market for life insurance and pension
insurance amounts to approximately 8 percent, with a 2.5 percent of the
bank market. Länsförsäkringar includes Agria Djurförsäkring (Animal
Insurance). The Alliance manages assets totaling SEK 170 billion.
Premium income in 2001 amounted to slightly more than SEK 19 billion.